James Dell et al. v. Zeifman Partners, 2019 CanLII 74036

Normal Farm Practices Protection Board

Commission de protection des pratiques agricoles normales

1 Stone Road West, 2nd Floor NW Guelph, Ontario N1G 4Y2 Tel: (519) 826-3433 Fax: (519) 826-4232 Email: NFPPB@ontario.ca

1 Stone Road West, 2nd étage NW Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433 Téléc.: (519) 826-4232 Courriel: NFPPB@ontario.ca

Normal Farm Practices Protection Board

IN THE MATTER OF: The Farming and Food Production Protection Act, 1998, S.O. 1998, Chapter 1;

AND IN THE MATTER OF an application for a determination as to whether the disturbances from 2021 Four Mile Creek Road, Niagara-on-the-Lake result from a normal farm practice;

Board File No. 2015-02

B E T W E E N:

James Dell, Sophie Dell, Ron Quevillon, Charlene Quevillon, Dino Lavalle, Mary Lavalle, Dan Lavalle, Larry Bourk, Joan Bourk, Richard Zirger, Judi Zirger, Robert Zirger, Sharon Zirger, George Lepp, Cindi Lepp, Mark Lepp and Erica Lepp

APPLICANTS

-AND-

Zeifman Partners, as operator of the waste disposal site at 2021 Four Mile Creek Road, Niagara-on-the-Lake

RESPONDENT

Appearances:

Paul Marshall/Cassandra Kirewskie, Counsel for the Applicants

Stanley D. Berger, Counsel for the Respondent

Before:

Glenn C. Walker, Vice-Chair

Thomas Field, Member

Douglas Eadie, Member

DECISION ON COSTS

INTRODUCTION

An application was made to the Board by the Applicants pursuant to Section 5 of the Farming and Food Production Protection act, 1998 (FFPPA). After a hearing lasting twenty days, a decision was rendered in favour of the Applicants. Both the Applicants and the Respondent have now applied to the Board for an award of costs of the hearing.

LAW ON COSTS

Section 17.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, sets out the two statutory prerequisites to the Board’s jurisdiction to award costs. That section provides:

"Costs

17.1(1) Subject to subsection (2), a tribunal may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding.

Exception

(2) A tribunal shall not make an order to pay costs under this subsection unless,

a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith, and

b) the tribunal has made rules under subsection (4).

Amount of Costs

(3) The amount of the costs ordered under this section shall be determined in accordance with the rules made under subsection (4).

Rules

(4) A tribunal may make rules with respect to,

a) the ordering of costs;

b) the circumstances in which costs may be ordered; and

c) the amount of costs or the manner in which the amount of costs is to be determined."

The Board has made rules reflecting section 17.1 of the Statutory Powers Procedure Act and the rules appear as Section 66 of the Normal Farm Practices Protection Board – Rules of Practice and Procedure (Rules). Subsection 66(1) of the Rules provides that where a party believes that another party has acted clearly unreasonably, frivolously, or in a vexatious manner, or in bad faith, considering all of the circumstances, they may ask for an award of costs.

In Subsection 66(8) of the Rules, the Board has enumerated some of the circumstances in which costs may be ordered as permitted by subsection 17.1(4) of the Statutory Powers Procedure Act.

Subsection 66(8) states as follows:

"Clearly unreasonable, frivolous, vexatious, or bad faith conduct can include, but is not limited to:

(a) failing to attend a hearing event or to send a representative when properly given notice, without contacting the Board;

(b) failing to give notice or adequate explanation or a lack of cooperation during pre-hearing proceedings, changing a position without notice, or introducing an issue or evidence not previously mentioned;

(c) failing to act in a timely manner or to comply with a procedural order or direction of the Board where the result causes undue prejudice or delay;

(d) conduct necessitating unnecessary adjournments or delays or failing to prepare adequately for hearing events;

(e) failing to present evidence, continuing to deal with issues, asking questions or taking steps that the Board has determined to be improper;

(f) failing to make reasonable efforts to combine submissions with parties of similar interest;

(g) acting disrespectively [sic] or maligning the character of another party; and

(h) knowingly presenting false or misleading evidence."

Subsection 66(9) also provides that:

"The Board will consider the seriousness of the misconduct. If a party requesting costs has also conducted itself in an unreasonable manner, the Board may decide to reduce the amount awarded; the quantum of costs awarded shall be in the discretion of the Board. In determining the quantum, the Board may take into consideration the concept of partial and substantial indemnity, and the Rules and Regulations regarding the quantum of costs awarded in the Ontario Superior Court of Justice."

In the matter of Dubois v. Burkhardt (No. 1) 2010 ONNFPPB 55, the Board stated as follows:

"The decision in this matter is intended to establish a Board practice that costs are not awarded lightly nor are they awarded routinely. Awards of costs will be rare. Potential parties and the public should not be fearful of participating in Board proceedings. Costs should never be used as a threat or a reason to dissuade public participation. The Board has the statutory jurisdiction to award costs for the purpose of controlling its process. Costs before the Board are not intended to follow “the cause” nor are they intended in any way to indemnify a successful party. Each application for costs will be decided on its own merit, based on an assessment of conduct."

APPLICANTS’ CLAIM FOR COSTS

The Applicants have submitted a costs brief consisting of 238 paragraphs alleging unreasonable and bad faith conduct on the part of the Respondent. The claim for costs can be broken down as follows:

1. The costs of a first application brought by Richard and Judi Zirger in 2012 totalling $46,134.53.

2. The costs in Bankruptcy Court on a successful application for leave to bring the second application under the FFPPA to the Board totalling $341,471.57.

3. The costs of a motion heard October 6, 2015 brought by the Applicants to compel compliance with a Pre-Hearing Conference Order dated July 13, 2015 for disclosure totalling $23,778.02.

4. The costs of a motion heard November 2, 2015 brought by the Applicants to compel further compliance with the said Pre-Hearing Conference Order totalling $25,978.70.

5. The costs of responding to the Respondent’s allegedly frivolous and vexatious interrogatories totalling $6,118.95.

6. The costs of the Applicants’ testimony (first 7 days of hearing, including preparation and attendance) totalling $161,642.60.

7. The costs of challenging the impartiality of the Respondent’s expert witness totalling $31,238.85.

8. The costs of the entire hearing thrown away as a result of the Respondent’s failure to disclose the December 2015 shutdown and the February 2016 sale of the digester totalling $485,667.35.

9. The cost of the Applicants pursuing their right to have a copy of the transcript of the hearing by enforcing the Respondent’s compliance with Rule 39(5) totalling $78,309.00.

The costs claimed by the Applicants total $1,200,339.57 and appear to be calculated on a full indemnity basis.

COSTS OF THE FIRST APPLICATION

The first application brought by Richard and Judi Zirger only was withdrawn by them on December 7, 2012. The Zirgers cited inadequate disclosure as the reason for the withdrawal. The Applicants allege that the Respondent acted unreasonably and in bad faith in attempting to prevent the Applicants from obtaining disclosure through Freedom of Information Requests. The Applicants further submit that the Respondent engaged in conduct deserving rebuke in the events leading up to the present litigation and rely upon Provincial Court Judges Assn. (Manitoba) v. Manitoba (2012), 34 C.P.C. (7th) 388 (Man. Q.B.).

Firstly, the Board finds that the first application did not involve the same parties as the present litigation, being brought by only two of the sixteen applicants in this matter. Secondly, it was the decision of the Zirgers to withdraw in 2012 rather than pursue further disclosure as they did in the present case and ask for an award of costs in that matter. Consequently, the Board will not consider the claim for costs under this heading.

COSTS OF BANKRUPTCY COURT APPLICATION

Similarly, the claim for costs of the application brought in Bankruptcy Court for leave to commence this litigation relate to separate litigation and again the Applicants rely upon this being an event leading up to the present matter where the Respondent acted unreasonably and in bad faith. They allege that the leave application was unnecessary and should not have been opposed and that the Respondent changed its position and consented to the leave order at the last minute. Apparently, no costs were awarded against the Respondent at this time although it would have been open to the Applicants to ask for costs from the Court. For this reason, we decline to consider a claim for costs under this heading.

COSTS FOR MOTION OF OCTOBER 6, 2015

With respect to the first motion to enforce compliance with the Pre-Hearing Order of July 13, 2015, the Applicants allege that the Respondent failed to act cooperatively at the pre-hearing disclosure stage in that it failed to make reasonable efforts to combine its submissions with the submissions of the Applicants; it failed to cooperate at the July 6, 2015 Pre-Hearing Conference; it gave a vague response in the Answer it was ordered to provide; that it did not give proper professional disclosure; that it failed to consent to the introduction of previously admitted evidence and that it preferred its interests over its duties as a Receiver and, as such, as an officer of the Court.

Counsel for the Respondent has considerable litigation experience. In our view, the Respondent should not be rebuked for taking the positions that it did in this complex litigation.

Although the Applicants may have brought this conduct within the definition in Rule 66(8)(b) (lack of cooperation during pre-hearing proceedings) or (c) (failing to comply with a procedural Order where the delay causes undue delay or prejudice), the conduct must be clearly unreasonable or in bad faith. The Board must consider the seriousness of any misconduct and whether the party requesting costs has conducted itself in an unreasonable manner.

The Board finds that the conduct of the Respondent leading up to the motion of October 6, 2015 does not meet the threshold for an order of costs and for these reasons and the reasons given below declines to award costs under this heading.

COSTS OF RESPONDING TO INTERROGATORIES

The Applicants claim costs for answering the interrogatories posed by the Respondent which they claim were frivolous, vexatious and made in bad faith. Although counsel for the Respondent may have been on a “fishing expedition” attempting to find some other source for the alleged disturbances, he should be granted a broad discretion for the nature of the questions which could have possibly had relevance to the hearing, as much broad discretion as given to the Applicants in their questions. The Board declines to award costs under this heading.

COSTS OF FIRST SEVEN DAYS OF HEARING

Please see below under the heading “Costs of Hearing Thrown Away”.

COSTS OF CHALLENGING RESPONDENT’S EXPERT WITNESS

The Applicants challenged the impartiality of the Respondent’s only expert witness, Clare Riepma, on the basis that he worked for PlanET Biogas Solutions Inc. who designed and built the Vandermeer digester. They were not successful in preventing Mr. Riepma from testifying. The Board took the position that it could not determine whether his evidence was biased in favour of the Respondent until it heard his testimony and could decide as to how much weight it would put on his evidence. No costs are awarded under this heading.

COSTS OF HEARING THROWN AWAY

The Applicants seek costs of not only the first seven days of the hearing but also the entire hearing on full indemnity basis. They allege that counsel for the Respondent misled the Board and the Applicants by failing to disclose the shutdown and eventual sale of the digester. The shutdown of the digester is not relevant to this rationale in our opinion as it could have been restarted and continued operation. However, the sale of the Vandermeer Greenhouse and attached digester is relevant.

The following dates are important to this discussion. The hearing took place on the following dates: December 3, 4, 8, 9, 10 and 11, 2015; January 12, 13, 14, 15, 21 and 22, 2016; April 13, 14, and 15, 2016; June 21, 22 and 23, 2016 and July 5 and 6, 2016. A conditional offer to purchase the Vandermeer operation was accepted by the Respondent on February 8, 2016 and the sale was approved by the Court on July 28, 2016.

The sale of the Vandermeer operation would render any decision of this Board moot as any order would only affect the current owner/operator of the digester. No evidence as to the sale or the prospective sale of the Vandermeer operation was called by either party. The Board’s final decision was made based on the evidence received during the evidentiary portion of the hearing which concluded on July 6, 2016.

Although the Applicants were no doubt aware that the Vandermeer operation would be sold since as counsel for the Respondent stated that is what Receivers do, the Board finds that there was an obligation on the Respondent to disclose the existence of an accepted Offer to Purchase. Had that been done, the Applicants could have chosen to adjourn the hearing to see if the offer was approved by the Court and any other conditions removed. If the sale proceeded, the option could then have been to withdraw the application and then commence another application if disturbances continued under the new owner/operator. On June 23, 2016, when the question was put to him, counsel for the Respondent denied any knowledge of an Offer to Purchase. In addition, any witnesses on the Respondent’s witness list who could have answered that question were withdrawn without explanation late in the hearing. The conclusion that must be drawn is that the Respondent did not want to disclose this information.

In order to award costs under this heading the Board must find that the Respondent acted in bad faith. The Board finds that the Respondent did act in bad faith in not disclosing in a timely manner the existence of an accepted Offer to Purchase but declines to award any costs in view of the conduct of the Applicants.

The Board finds that counsel for the Applicants throughout these proceedings have conducted themselves in an unreasonable manner

(a) By showing throughout the proceedings a lack of respect for the Board, the Ministry and opposing counsel;

(b) By failing on numerous occasions to comply with directions from the Board and

(c) By prolonging the hearing with an unnecessary number of witnesses, an unnecessary number of motions and lengthy and repetitive questioning of witnesses.

For these reasons, we find that, despite the failure of the Respondent to disclose the proposed sale of the Vandermeer operation, no costs should be awarded to the Applicants.

COSTS WITH RESPECT TO COMPLIANCE WITH RULE 39(5)

The Board is not satisfied that the Respondent failed to comply with Rule 39(5) or, that if it failed to comply, it is sufficient grounds for an award of costs.

RESPONDENT’S CLAIM FOR COSTS

The Respondent seeks costs on a full indemnity basis of $44,880.00; a substantial indemnity basis of $39,270.00 or a partial indemnity basis of $26,180.00. The claim relates only to costs which the Respondent claims are exclusively related to the exceptional circumstances outlined in Rule 66(8) and include the following circumstances:

1. When the Applicants changed their position without notice or introduced evidence not previously mentioned;

2. When the Applicants failed to act in a timely manner;

3. When the Applicants failed to comply with the Board’s procedural direction;

4. When the Applicants’ conduct caused unnecessary delay;

5. When the Applicants continued to deal with issues or took steps that the Board determined to be improper and

6. When the Applicants acted disrespectfully and made unsubstantiated allegations maligning the character and integrity of the Respondent, the Respondent’s counsel and the Board which necessitated some form of response.

The Board has reviewed the instances purporting to support each of the above-noted circumstances but does not intend to review each circumstance separately in these reasons. For the most part they are supported by the facts. In the Board’s view, it is not necessary to consider whether any misconduct on the part of the Applicants is serious enough to warrant an award of costs but whether the misconduct of the Respondent in not disclosing the acceptance of an Offer to Purchase the Vandermeer operation in a timely manner disqualifies the Respondent from any costs at all.

Neither party is blameless in the conduct of this matter. Counsel for both parties lacked civility with each other and this application would have proceeded more efficiently if all of the lawyers had been more receptive to cooperating with each other. For these reasons the Board does not award any costs to the Respondent.

CONCLUSION

Costs are always in the discretion of the Board and can be only granted in the special circumstances set out in section 17.1 of the Statutory Powers Procedure Act, R.S.O. 1990, Chapter S.22. The party claiming costs must come to the Board with clean hands as to its conduct. The Board has determined that neither party is without blame in its conduct of this proceeding and consequently has exercised its discretion not to award costs to the Applicants or to the Respondent.

Dated at Chatham, Ontario this 30th day of July, 2019.